Amid reports that Shree Minerals' Nelson Bay River mine is under investigation for breaching its federal environmental permit, Australian Greens Leader Christine Milne says the Abbott government must not proceed with plans to hand protection powers over to the state.

It's believed the Tasmanian Government amended its permit to allow the Nelson Bay River Mine to produce 20 times more acid-producing waste rock than originally planned, but the Federal Environment Department was not notified or given a chance to model the impacts on threatened species.

Shree Minerals has now confirmed its iron ore operation in the Tarkine has been suspended and the Australian Greens say it's clear Tasmania's future is not in mining.

"This cynical political experiment has failed. It's time to stop pretending that destroying the Tarkine will deliver any kind of prosperity to Tasmania," said Greens Leader and Tasmanian Senator Christine Milne.

"Who could forget the pre-election hype from then AWU president Paul Howes, federal minister Tony Burke and Premier Lara Giddings, trying to justify destruction of the Tarkine?